Options Trading News

Yesterday's session was the reverse of the previous two days, with the big three stock indexes and the CBOE Volatility Index all higher.

The S&P 500 was in positive territory all day and finished at 1461.02, up 3.87 points. It had climbed above 1464 in the first hour of trading but gave up ground from there. Support remains at 1420 and resistance at 1475.

The Nasdaq 100 was up almost 9 points to 2727.65. It was as high as 2735 but followed a pattern similar to that of the SPX. It has support and resistance at 2670 and 2785 respectively.

The Russell 2000 was up 4.81 points to 879.51, a new all-time closing high. The small-cap index is right up against resistance, but support continues to 853.

All three equity indexes are above their 10-day moving averages.

The VIX rose 0.19 points, or 1.4 percent, to end the day at 13.81. It had fallen to 13.22 in the morning, its lowest level since May 2007, but rebounded quickly from there--indicating that option sellers are looking for a floor in volatility levels.

The VIX futures were mixed at the end of the day. The January futures gained 0.05 points to close at 14.70, while the February futures lost 0.05 points to finish at 16.40.

The early action pushed the iPath S&P 500 VIX Short-Term Futures ETN (VXX) below 27 to yet another all-time intraday low, but it did end the day with a small gain.

More than 568,000 VIX options changed hands, led by 359,000 calls. The action left the VVIX Index, which measures the implied volatility of the VIX options, barely higher at 78.51.

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

optionMONSTER® provides stock market insight, advanced options education, and actionable trade ideas to meet the needs of do-it-yourself investors. After spending decades in the trading pits of Chicago, Jon 'DRJ' and Pete Najarian founded the company in 2005 to help people better manage their own investment portfolios.

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